Barista eyes franchisee route for growth
Undertaking financial re-engineering to maximise returns
Business Standard — June 5, 2003

As a first step, the company has identified that it will convert some of its existing company-owned espresso bars into franchisees.

This means that the company will sell some of its existing outlets and will take the same back as franchisee.

The company had earlier said that it would be following the franchise model from now on instead of the company-owned outlets.

"We plan to have a 50:50 ratio between the company-owned and the frachisee outlets," BCC chief operating officer Yogesh Samat told Business Standard. He said that the company plans to have about 200 espresso bars by the year end.

Currently, the company has about 130 outlets and almost all of them are owned by the company. He, however, said that the company had not yet identified which outlets were likely to be sold.

Samat also said that the company was planning to diversify into adjacent categories. Though he refused to divulge the categories that BCC would consider foraying in, Samat said that they would be related to coffee only since ‘coffee is our core business.’

The company is also expanding its operations outside the country. While the company had earlier entered into a joint venture in Sri Lanka, it has now signed a franchisee agreement for all the Gulf Co-operation Council (GCC) countries in the Middle East.

BCC has already set-up a wholly owned subsidiary — Barista Coffee International — which is based in Mauritius and would be the holding company for the group’s expansion overseas. Samat, however, ruled out foray in US, UK & Europe.

The company had cut the prices of its products by 15-30 per cent in mid-April as a result of the customer feedback, Samat said.

He added that the reduction in prices has led to an increase in footfalls by 15-17 per cent during the last one month. Samat claims that the out-of-home coffee segment has grown by almost 100 per cent in the last one year.

While Tata Coffee holds about 34 per cent stake in the company, employees hold about eight per cent and the rest is with a set of privately held companies.